Tata Steel Limited · NSE:TATASTEEL
Tata Steel — FY2010 Earnings Presentation
58 slides from Tata Steel's earnings presentation, May 27, 2010
Slide 1: Consolidated Financial Results, Financial Year Ended 31st March 2010
Pilot EAF at Teesside Technology Center Coating Line, IJmuiden Consolidated Financial Results Financial Year Ended 31st March 2010 Analyst Meet – Mumbai May 27 , 2010 Kalzip® Solar Systems Bandra Worli Sea Ink, Mumbai Singapore 1
Slide 2: Agenda
Agenda Introduction and Consolidated Highlights Global Business Environment Performance of European Operations Performance of Indian and South East Asian Operations Group Financial Performance Projects Status Update Business Outlook 2
Slide 3: Introduction and Consolidated Highlights
Agenda Introduction and Consolidated Highlights Blast furnace, Jamshedpur 3
Slide 4: Tata Steel Group – Safety Performance
Tata Steel Group – Safety Performance Lost Time Injury Frequency (LTIF) 3.50 3.06 Lost time injury frequency rate was 0.95, a 3.00 27% improvement over previous year 2.50 2.35 2.10 On track to achieve our vision target of 0.4 2.00 5 tragic fatalities to employees/contractors 1.50 1.31 Proces
Slide 5: Group Financial Highlights – Quarterly
Group Financial Highlights – Financial Year Ended 31st March’10 Deliveries Mn T Turnover US$ Mn 7 6.2 6.2 6.5 7,000 6,123 5,654 5,833 6 5.4 6,000 5,186 5 5,000 4 4,000 3 3,000 2 2,000 1 1,000 0 - Q110 Q210 Q310 Q410 Q110 Q210 Q310 Q410 EBITDA US$ Mn PAT * US$ Mn 1,400 600 542 1,187 1,200 400 1,000 7
Slide 6: Group Financial Highlights – FY10
Group Financial Highlights – Financial Year Ended 31st March’10 Deliveries Mn T Turnover US$ Mn 30 28.5 35,000 32,800 24.3 30,000 25 25,000 22,796 20 20,000 15 15,000 10 10,000 5 5,000 0 - FY09 FY10 FY09 FY10 EBITDA US$ Mn PAT * US$ Mn 1,200 1,102 4,500 4,118 1,000 4,000 3,500 800 3,000 600 2,500 2,
Slide 7: Global Business Environment
Agenda Global Business Environment Fume plant implemented at NTS plant, Tata Steel Thailand for environmental improvement 7
Slide 8: Key Themes - Recovery in Global Steel Market
Key Themes - Recovery in Global Steel Market Macro Economy Global Crude Steel Consumption & Capacity Utilisation Mt Per cent 2010-11 Recovery continues across the globe 130 2007-08 2008-09 100 Capacity Utilisation (RHS) 95 120 with Emerging Asia seeing strong growth 90 110 85 Europe exits rece
Slide 9: Key Theme - Global Steel prices
Key Theme - Global Steel prices HRC price, US$/tonne Price developments 1,400 India (Mumbai) Chinese domestic (incl VAT) Prices have risen globally following the 1,200 USA domestic (FOB Gulf) Russia export (FOB Black Sea) large increase in raw material costs 1,000 Germany domestic European HRC
Slide 10: Key Theme - Raw materials Pricing Dynamics
Key Theme - Raw materials Pricing Dynamics Iron ore fines price (FOB Brazil), US cents/mtu Raw material developments 180 160 140 Major suppliers have moved to quarterly 120 100 contracts 80 60 Iron ore quarterly price (FOB) derived 40 20 from Chinese CFR spot price to highest 0 2000 2001 2002
Slide 11: Performance of European Operations
Agenda Performance of European Operations Landscape view of Port Talbot steel works in South Wales 11
Slide 12: European Steel Market
European Steel Market Market update European Steel Service Centre Physical Strip Product Stocks Mt Months supply European steel consumption continues 2.6 3.4 Stock 3.2 2.4 levels to recover and was up 19% YoY 3.0 Months 2.2 Steel consuming sectors are recovering supply 2.8 2.0 2.6 slowly excep
Slide 13: European Steel Consuming Sectors
European Steel Consuming Sectors End-use sectors are recovering Purchasing Managers Index – EU sectors 65 Above 50 = Expansion UK auto production is expected to grow by 55 15% in 2010 45 EU industrial engineering is recovering , albeit slowly 35 Engineering Automotive Growth seen in engineer
Slide 14: Operating Performance – Tata Steel Europe
Operating Performance – Tata Steel Europe 7 8,000 6.4 7,337 7,288 6 7,000 5.6 5.2 4.9 5,814 6,000 5 4.3 4.2 4.0 3.9 3.9 5,000 4 3.8 3.7 3.6 3.4 3,955 3.2 3,8054,000 3 2.7 2.8 3,734 3,730 3,390 3,000 2 2,000 1 1,000 0 - Q1 FY09 Q2 FY09 Q3 FY09 Q4 FY09 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Production (Mn T)
Slide 15: EBITDA Bridge FY09 to FY10 – Tata Steel Europe
EBITDA Bridge FY09 to FY10 – Tata Steel Europe US$ 4.5 Bn US$ 3.2 Bn 15
Slide 16: Year of Two Halves - Tata Steel Europe
Year of Two Halves - Tata Steel Europe Average Selling Prices US$ / T Production Mn T 1,200 9 7.9 1,003 979 2% 8 1,000 6.8 7 16% 800 6 5 600 4 400 3 2 200 1 - 0 H1 FY10 H2 FY10 H1 FY10 H2 FY10 Cost Of Goods Sold Per Tonne US$ / T EBITDA US$ Mn 1,400 600 513 1,167 400 1,200 163% 1,000 889 24% 200 800
Slide 17: Tata Steel Europe – Year of Two Halves
Tata Steel Europe – Year of Two Halves EBITDA US$ Mn Key Operating Highlights 500 400 366 Continued incremental increase in 300 200 147 production, deliveries and steel prices 100 - Record Output at Port Talbot in March’10 -100 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 -200 -300 coupled with improved prod
Slide 18: Operating Performance – Tata Steel Europe
Operating Performance – Tata Steel Europe Strip Products Long Products Distribution &Building 2.0 1.8 1.4 1.3 1.2 1.6 1.2 1.0 1.6 1.2 1.0 1.0 0.9 0.9 1.5 1.0 0.9 1.2 0.8 0.7 0.8 1.0 0.6 0.6 0.4 0.4 0.5 0.2 0.2 0.0 0.0 0.0 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY10 Q2 FY1
Slide 19: Capital Projects – Tata Steel Europe
Capital Projects – Tata Steel Europe BOS gas recovery plant at Port Talbot, Wales Invested £60 Mn in ancillary schemes associated with on site power generation and gas distribution infrastructure Investment aimed to achieve : 60% reduction in natural gas usage across the site and 20% reduction
Slide 20: Response to market conditions and positioning for future
Response to market conditions and positioning for future Ongoing initiatives Weathering the storm benefits exceed target Weathering the Fit for the Future headcount reduction totals ~5,800 Storm & Fit for YTD savings of Speciality Steel Business turns profitable the Future US$ 1.5 Bn Rationa
Slide 21: Response to market conditions and positioning for future
Response to market conditions and positioning for future Research & Development Thrust areas Palestra, building in London has photovoltaic panels in the roof Developing state-of-the-art thin film photovoltaic systems suitable for integration onto TSE products PV Coating Working with Australian C
Slide 22: Response to market conditions and positioning for future
Response to market conditions and positioning for future Latest initiatives Putting ‘Customer First’ in strategy , planning and service Initial market Setting up a single global strategic marketing unit Customer First sector plans Developing market focused approach targeting eight key complete
Slide 23: Outlook for Tata Steel Europe
Outlook for Tata Steel Europe European steel consumption continues to recover, and is expected to rise by 15-20% to 140 Mn tonnes in 2010 Capacity utilization at Tata Steel Europe likely to be > 85% in H1 FY11 Steel price trends likely to remain firm in H1 FY11 with goal to fully recover raw m
Slide 24: Performance of Indian and South East Asian Operations
Agenda Performance of Indian and South East Asian Operations Pan view of Tata Steel Works, Jamshedpur 24
Slide 25: Indian & South East Asian Steel Market
Indian & South East Asian Steel Market Indian Apparent Steel Consumption, Mn T Indian Market update 80 70 Indian steel market continues to be robust 60 Apparent steel consumption likely to grow 50 to 63 million tonnes, up14% in 2010 40 30 Automotive & Construction segment 20 outlook likely t
Slide 26: Operating Performance – Tata Steel India
Operating Performance – Tata Steel India Mn T Production Mn T Deliveries 7.0 6.2 7.0 6.4 6.0 6.0 5.4 5.2 5.0 5.0 4.0 4.0 3.0 3.0 2.0 2.0 1.0 1.0 - - FY09 FY10 FY09 FY10 Turnover US$ Mn EBITDA US$ Mn 6,000 5,413 5,571 2,500 2,183 2,102 5,000 2,000 4,000 1,500 3,000 1,000 2,000 1,000 500 - - FY09 FY10
Slide 27: Operating Performance – Tata Steel India
Operating Performance – Tata Steel India Mn T Production Mn T Deliveries 2.0 2.0 1.8 1.7 1.7 1.8 1.6 1.7 1.5 1.5 1.5 1.6 1.6 1.4 1.4 1.4 1.2 1.2 1.0 1.0 0.8 0.8 0.6 0.6 0.4 0.4 0.2 0.2 - - Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Turnover US$ Mn EBITDA US$ Mn 1,800 1,634 900 8
Slide 28: Key Operating Indicators – Tata Steel India
Key Operating Indicators – Tata Steel India KPI UOM FY10 FY09 HM + Scrap Consumption Kg/tcs 1,111 1,134 Lime Consumption – LD#1 Kg/tcs 79.3 83.6 Lime Consumption – LD#2 Kg/tcs 81 81 Coke rate reduction Kg/thm 443 483 Increase in PCI Kg/thm 117 89 Maintenance cost Rs/tss 873 856 Power Rate Kwh/tss 38
Slide 29: Operating Performance – Tata Steel India
Operating Performance –Tata Steel India Flat Products 848 793 885 946 1,000 800 790 780 770 658 698 704 3 760 750 740 730 720 4 758 143 710 700 690 680 800 7 122 670 660 650 640 120 4 630 620 610 600 117 590 580 570 560 550 540 530 520 510 600 319 345 500 490 480 470 460 315 314 450 440 430 420 410
Slide 30: Value Additions – Tata Steel India
Value Additions – Tata Steel India Tube Division Wire Division 100 882 1,000 80 882 876 919 1,000 813 843 877 90 770 900 70 900 80 90 94 800 65 800 85 60 68 70 80 700 700 60 600 50 55 600 57 50 500 40 500 40 400 30 400 30 300 300 20 20 200 200 10 100 10 100 - - - - Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Q1
Slide 31: Market share Trend – Tata Steel India
Market share Trend – Tata Steel India Total Automotive CR Auto 1000 44% 42% 50% 500 38% 36% 34% 36% 40% 41% 38% 35% 800 40% 400 861 857 891 432 432 30% 600 30% 300 370 418 25% 687 20% 400 20% 200 15% 10% 200 10% 100 5% 0 0% 0 0% FY07 FY08 FY09 FY10 FY07 FY08 FY09 FY10 '000 tonnes Market Share (%) '0
Slide 32: Branded Products – Tata Steel India
Branded Products – Tata Steel India Sale of Branded Products 1,514 1,519 1,600 35% 1,400 26% 1,277 28% 28% 29% 30% 1,200 25% 1,025 1,000 20% 800 15% 600 10% 400 200 5% - 0% FY07 FY08 FY09 FY10 Sale (US$ Mn) Market Share (%) ~300 dealers added to increase reach in retail rebar segment Launched “T
Slide 33: Ferro Alloys & Minerals Division – Tata Steel India
Ferro Alloys & Minerals Division – Tata Steel India 1400 35 31 Stainless steel mill orders have 1,128 1,131 1200 1,19130 strengthened due to improvement in real 1000 876 25 26 demand and restocking along the supply 800 20 16 chain 600 15 445 406 Prices are likely to remain firm globally in 400 3
Slide 34: Savings through Improvement Initiatives – Tata Steel India
Savings through Improvement Initiatives – Tata Steel India Break up of Savings achieved in FY’10 through US$ Mn improvement initiatives: 415 40 450 24 326 25 400 350 300 189 250 200 115 150 100 50 - Aspire TOC Marketing Initiatives Synergy FY08 FY09 FY10 Initiatives resulting in Savings Raw Coal p
Slide 35: Operating Highlights – South East Asia
Operating Highlights – South East Asia Deliveries Nat Steel EBITDA 60 56 US$ Mn 3.0 2.4 2.4 Mn T 50 44 2.5 40 2.0 1.5 30 20 1.0 0.7 0.6 20 15 0.5 0.6 10 11 0.5 10 - - FY09 FY10 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 FY09 FY10 Q1 FY10 Q2 FY10 Q3 FY10 Q4 FY10 Tata Steel Thailand Deliveries EBITDA Mn T US$ Mn
Slide 36: Outlook – Tata Steel India & S.E. Asia
Outlook – Tata Steel India & S.E. Asia Tata Steel India All recent indicators point to accelerated GDP growth in 2010, but rising inflation a concern India’s apparent steel consumption remains strong with growth witnessed in industrial production, construction activity and passenger cars Incre
Slide 37: Group Financial Performance
Agenda Group Financial Performance Jubilee Park @ Jamshedpur 37
Slide 38: Group Financial Highlights – Half-yearly
Group Financial Highlights – Financial Year Ended 31st March’10 Production Mn T Deliveries Mn T 14.0 12.9 14.0 12.7 12.0 11.3 11.6 12.0 10.0 9% 14% 10.0 8.0 8.0 6.0 6.0 4.0 4.0 2.0 2.0 0.0 - H1 FY10 H2 FY10 H1 FY10 H2 FY10 EBITDA US$ Mn PAT * US$ Mn 2,500 800 648 600 1,944 159% 2,000 400 200 1,500 -
Slide 39: Group Financial Performance – Q4 FY10
Group Financial Performance – Q4 FY10 Tata Steel TS NSH* TSTH Tata Steel Europe Group(**) Deliveries (Mnt ) 1.7 3.9 0.6 0.3 6.5 Turnover (US$ Mn) 1,634 3,805 331 202 6,123 EBITDA (US$ Mn) 801 366 11 3 1,187 EBITDA margin (%) 49 10 3 1 19 EBITDA / tonne (US$) 471 94 18 10 183 PBT (US$ Mn) 711 One off
Slide 40: Group EBITDA Bridge- Q3 FY10 to Q4 FY10
Group EBITDA Bridge- Q3 FY10 to Q4 FY10 US$ 220 Mn US$ 253 Mn 40
Slide 41: Group Financial Performance – FY10
Group Financial Performance – FY10 Tata TS NSH* TSTH Tata Steel Steel Europe Group(**) Deliveries (Mnt ) 6.2 14.7 2.4 1.2 24.3 Turnover (US$ Mn) 5,571 14,659 1,392 703 22,796 Reported EBITDA (US$ Mn) 2,183 (301) 56 30 2,079 Impact of TCP (US$ Mn) - 223 - - 223 Underlying EBITDA (US$ Mn) 2,183 (78) 5
Slide 42: Group EBITDA Bridge – FY09 to FY10
Group EBITDA Bridge – FY09 to FY10 42
Slide 43: Debtors & Inventory Management
Debtors & Inventory Management Tata Steel India Tata Steel Europe 1 0.15 0.15 0.14 0.16 4 0.45 1 0.12 0.14 4 0.39 0.36 0.35 0.34 0.40 1 0.63 0.66 0.35 1 0.55 0.12 3 2.52 2.69 2.98 1 0.53 0.10 3 2.68 0.30 0.25 0.08 2 0 0.20 0 0.06 2 0.15 0 0.04 1 0.10 0 0.02 1 0.05 0 - 0 - Q1 FY10 Q2 FY10 Q3 FY10 Q4
Slide 44: Group Debt Position
Group Debt Position US $ Mn Gross Debt Net Debt 13,336 11,822 11,210 9,881 16,000 12,000 14,000 648 965 10,000 12,000 546 801 10,000 8,000 6,372 5,645 8,000 5,402 4,819 6,000 6,000 4,000 4,000 5,999 5,619 4,917 2,000 2,000 4,516 - - March'09 March'10 March'09 March'10 Tata Steel India Tata Steel Eur
Slide 45: Gross Debt Movement & Net Debt Position
Gross Debt Movement & Net Debt Position 45 Cash & Cash Equivalents include current investments
Slide 46: Borrowing Analysis – Tata Steel Europe
Borrowing Analysis – Tata Steel Europe Term Senior Facility Debt £Bn 4.00 3.50 3.20 0.63 3.23 0.83 3.00 2.60 0.23 2.50 2.00 1.50 1.00 0.50 0.00 Opening Balance Repayments Drawdown on Underlying Loan Foreign Exchange Closing Balance @ @ 31 Dec'07 Revolving Credit Balance Fluctuations 31 Mar'10 Facili
Slide 47: Consolidated Financial Ratios
Consolidated Financial Ratios Net Debt / EBITDA Net Debt/ Equity 2.00 70 1.77 59 1.65 60 50 42 40 1.00 30 20 10 10 5 0 0.00 Q1FY10 Q2FY10 Q3FY10 Q4FY10 March'09 March'10 47 Conversion Rate : USDINR – 44.9175
Slide 48: Pensions- Tata Steel Europe
Pensions- Tata Steel Europe Combined Surplus of all TSUK Pension Funds US$ Mn 700 600 503 531 500 500 400 300 217 200 Asset Mix in BSPS 100 120% 0 100% 2% 3% 2% Jun'09 Sep'09 Dec'09 Mar'10 3% 80% 66% 64% 64% 64% 60% 40% Aggregate size of Tata Steel Europe’s 4% 4% 4% 5% 20% Pension Assets : £ 11 Bn 2
Slide 49: Key Financial Milestones
Key Financial Milestones FY10 FY11 Issued GDRs worth US$ 500 Mn at US$ 7.644/share in July’09 Continue to assess options to raise Equity equity In Nov’09 exchanged US$ 493 Mn of its existing CARS Raising with a new foreign currency convertible bonds worth US$ 546.935 Mn The testing of covena
Slide 50: Projects Status Update
Agenda Projects Status Update 50
Slide 51: 2.9 Mtpa Brownfield expansion at Jamshedpur
2.9 Mtpa Brownfield expansion at Jamshedpur All facilities will have state-of-art environmental pollution control facilities to improve the environment of work place and town Major orders of for US$ 2,894 Mn have been finalized and placed The project is expected to be commissioned in the Oct-
Slide 52: Raw Materials Project : Mozambique
Raw Materials Project : Mozambique Feasibility Study for a Stage 2 expansion to 10.6 Mn tonnes completed Environmental approval awarded Construction of Stage1 to be completed in H2 CY11 and will produce 5.3 Mn ROM tonnes per annum at full capacity Recent tests confirm 84% increase in Coal Re
Slide 53: Raw Materials Project : New Millennium Corporation
Raw Materials Project : New Millennium Corporation On completion of feasibility study, decision taken by New Millennium to develop Direct Shipping Ore Mines Project has proven and probable mineral reserves of 64.1 Mn tonnes Production of 4 Mn tonnes of Sinter fines is expected to commence from
Slide 54: Dhamra Port Company Ltd.
Dhamra Port Company Ltd. Dhamra Port Company Ltd (DPCL) a 50:50 JV with L&T All-weather deep sea port awarded on 34 year Concession by Government of Orissa and renewable for two 10 year terms Bulk handling material system Phase-I facilities: 2 fully mechanized berths, 18 km long channel allowi
Slide 55: Tinplate Company of India Ltd. – Capacity Expansion
Tinplate Company of India Ltd. – Capacity Expansion TCIL is commissioning second Cold Roll Mill to manufacture Black Plate Captive Black Plate making facility will facilitate customization, shorter delivery time and improved yields in making Black Plate The project involves installation of an
Slide 56: Business Outlook
Agenda Business Outlook Freight terminal at Port Talbot works, UK 56
Slide 57: Business Outlook
Business Outlook Global economy recovery is continuing, but at varying speeds across the globe. Forward indicators of economic activity are strong pointing to continued growth in the coming quarter Chinese policymakers continue with expansive fiscal policy with specific monetary tightening measu
Slide 58: Thank You
<p TATA TATA STEEL Thank You